Why the highest valuation isn’t always the best valuation

As Surrey and Hampshire estate agents, we’re having plenty of conversations with our clients about the uncertainty people are feeling right now.

Whether it’s the job market or the cost of living, there’s a general sense that things are much harder than they once were. Of course, from our perspective, the majority of the conversation is around the property market. 

According to Rightmove’s latest House Price Index, the average asking price of a newly listed property fell by 2 per cent in August – the largest August fall since 2018. At the same time, the number of homes available to buyers is at a 12-year high for this time of year.

Understandably, some sellers are concerned. And that brings us to the subject of this article: why, in a market such as this, getting the valuation right from the outset is critical.

Realistic valuations

When you’ve decided to sell your home, being told it’s worth more than you expected is understandably appealing. The higher the number, the better you feel. It’s just human nature.

So, if you’re inviting several estate agents to value your property, choosing the one suggesting the highest asking price can seem like an obvious decision. After all, why would you try and sell your property for less than you need to?

However, our team of Hampshire and Surrey estate agents are urging sellers to tread carefully when it comes to selecting and instructing an estate agent – particularly in a market where buyers have considerably more choice.

Get it right the first time

Yes, it can be very tempting to put a property on the market at an ambitious price and see what happens. If somebody buys it, great. And if they don’t, you can always reduce it later.

Unfortunately, property sales don’t necessarily work that way.

Rightmove’s research earlier this year found that homes which didn’t require an asking-price reduction took an average of 36 days to find a buyer. However, for properties that needed their asking price reduced, the average was 127 days. That’s a staggering extra three months on the market.

A newly listed home enjoys a valuable window of attention. Buyers who have already registered for alerts see it for the first time, it appears as a new listing on property portals and an estate agent can immediately introduce it to suitable buyers already on their books.

If the price is significantly higher than comparable properties, some of those buyers may simply disregard it. Unfortunately, reducing the price several weeks later doesn’t necessarily recreate that initial new property excitement, as the property is already familiar. 

Even worse is the fact that by that point, buyers may have found something else, or are even questioning why it hasn’t sold in the first place. Assumptions such as ‘there must be something wrong with it’ or statements such as ‘it was priced way too high’ start to creep in, by which time some of the damage caused by incorrect pricing may already have been done.

Ask the right questions

If three agents suggest that your home is worth around £700,000 and a fourth says £750,000, it’s perfectly understandable to be attracted to the fourth.

But the important question should be ‘which agent can best demonstrate what buyers are likely to pay for it?’, rather than ‘which agent says my property is worth the most?’.

A good valuation should be based on evidence: recent sales of comparable properties, current competing homes, buyer demand and, importantly, detailed knowledge of the local market.

In places such as Farnham, Godalming, Haslemere, Alton and Grayshott, that local knowledge can make a significant difference.

Two apparently similar homes can command different prices because of the road they’re on, school catchments, plot size, parking, access to the town centre or station, the quality of an extension, or simply the particular type of property local buyers are looking for at that moment.

An online valuation tool cannot always see those differences. And neither can an estate agent without detailed knowledge of the area.

Valuing to sell, not to win an instruction

An estate agent’s valuation should be designed to achieve the best possible result for the seller – not simply to persuade the seller to instruct that agent.

We understand why an ambitious valuation is attractive. Nobody wants to hear that their biggest asset might be worth less than they’d hoped.

But agreeing an unrealistic asking price doesn’t make a property worth that amount. Putting a figure on a property doesn’t somehow ensure it will sell for that price. Ultimately, the market decides its real value.

And in the current market, where buyers have more properties from which to choose, an asking price that is noticeably out of kilter with comparable homes can make it easier for buyers to look elsewhere.

That doesn’t mean sellers should price cheaply. In fact, quite the opposite. It’s the job of our team of Surrey and Hampshire estate agents, for example, to understand where the upper end of a property’s realistic value lies and then create the interest, presentation and negotiation strategy needed to achieve the best possible price.

It’s very important to note here that there’s a big difference between optimistic pricing and ambitious but evidence-based pricing.

What if you’ve already been on the market for a while?

A lack of offers doesn’t automatically mean your asking price is wrong.

The quality of the marketing matters. So does photography, presentation, the property description, availability for viewings, the way enquiries are handled and how actively an agent follows up prospective buyers. Seasonality and changes in local demand can play a part too.

However, if you’re receiving few enquiries or plenty of viewings without serious offers, price is one of the things that should be reviewed. The important thing is to act on evidence rather than simply waiting and hoping.

Rightmove’s figures demonstrate just how significant the difference can be. Spending months at an unrealistic asking price before eventually reducing it can mean losing valuable time – particularly if your onward move depends upon securing a buyer.

Agent first, number second

So, if you’re thinking of selling and contemplating your estate agent options, we’d suggest that you ask prospective estate agents more than one question. Sure, ask them what they think it’s worth. But follow up with ‘why?’. Get them to show you evidence that backs up their valuation by asking them for comparable properties they have sold in the area – or, preferably, on the same street.

You may even find that the agent suggesting the highest value has the lowest experience of properties on that road. 

Ultimately, choose an agent because of their experience, local knowledge and the evidence they can provide to support their valuation, not simply because they flatter you with the highest price. Get that decision right at the outset and you could save yourself considerable time and heartache further down the line.

Thinking of making a move this summer? Contact your local Warren Powell-Richards branch to arrange a no-obligation valuation of your property.